Levelling the playing field

ADSL South Africa (Broadband South Africa), 2 April 2007

It seems that Government has finally realised that Telkom’s control over outbound traffic on the SAT3 landing station needs to come to an end. This means that we can expect to see broadband prices crash landing later this year.
 
The curtains are drawing to a close on Telkom’s performance as ‘The Monopolist’ where broadband Internet is of a concern in South Africa. Government has made its intentions clear in its new policy directives. ‘…Telkom and other possible SAT3 bandwidth sellers will be forced to meet the current inbound SAT3 pricing where competition dictates per Mbps rates’ (Broadband prices set to plummet, Oker, 1 April 2007).
 
Can you explain this in simpler terms?
 
Sure. ‘Outbound bandwidth on SAT3 is currently many times more expensive than inbound traffic, mainly due to competition on the inbound portion and Telkom’s monopoly on outbound traffic’ (Broadband prices set to plummet, Oker, 1 April 2007).
 
MD of Neotel, Mr Ajay Panday, knocked the nail straight on the head: “The leg from SA to London is priced at a certain level and that is an agreement Telkom has because of its exclusivity rights. However, if the London to SA circuit is priced at ‘x', then Telkom charges five times that for the half circuit from SA to London” (Broadband prices set to plummet, Oker, 1 April 2007).
 
In other words, Telkom’s ability to charge sky-high broadband prices will be severely impaired if Government has its way.
 
Is this all government will do in order to address high broadband prices?
 
No, it ‘…will further declare the SAT3 landing station an essential facility in terms of Section 43 of the new Electronic Communications Act, which includes the undersea cable’ (Broadband prices set to plummet, Oker, 1 April 2007).
 
In other words, true competition will be given even more breathing space.
 
Will Neotel benefit from such a move?
 
Yes, Neotel will benefit ‘…through VSNL, which is a shareholder in SAT3…’ (Broadband prices set to plummet, Oker, 1 April 2007). Neotel will be able ‘…to directly supply bandwidth on SAT3 to their customers’ (Broadband prices set to plummet, Oker, 1 April 2007).
 
In other words, Neotel will not be dependent on Telkom to get broadband services delivered at reasonable prices.
 
What was Neotel’s reaction to the news?
 
Neotel’s response was very positive to say the least because according to them ‘…this is a vital move to level the playing field in the current fixed line telecoms space and further said that they will now be able to offer clients full international SAT3 circuits at a reasonable price’ (Broadband prices set to plummet, Oker, 1 April 2007).
 
In other words, Neotel responded positively, because the move will help to give them a fighting chance against Telkom, while enabling them to offer fairly priced broadband services.
 
Will local broadband providers pass on the savings realised with the drastic price drops in international bandwidth?
 
Sure they will ‘…pass these savings on to consumers in the form of either price cuts or increased usage allowances’ (Broadband prices set to plummet, Oker, 1 April 2007).
 
In other words, customers can expect savings in one form or the other. We’re hoping for a combination.
 
ADSL South Africa (Broadband South Africa) welcomes Government’s intention to increase broadband penetration in South Africa for one, but don’t expect praise for something that is long overdue, especially when it’s not yet backed up by solid action.